To Lease or Purchase? .......That Is the Question

Car leases have gained in popularity in the past decade and are now often seen as a great way to get more car with a lower monthly payment. While leasing does often offer short term benefits, a lease will often end up costing more in the long run. At the end of a lease term, it is common to have charges for excess mileage and excessive wear when turning the car in.

In the short term, monthly payments will be lower with a lease than with a vehicle purchase. This aspect of the lease often makes it more attractive to the younger first or second time car buyer that may be just getting established in their career and want a more professional or a higher end car than they can afford with the typical car purchase. The lease payment versus a purchase payment can often be as much as a 50% to 60% difference.

The amount of the monthly payment is often what the decision to lease is based on. Leasing a vehicle is not for everyone but if you have a short commute and want to have a new vehicle every couple of years, then it may be the perfect fit for your needs. If it is not important for you to have a new car every 2-3 years, and you plan on keeping your car for several years then the a vehicle purchase would be the better situation. When it comes to comparing the two financially, the down payment is typically the same with either option but with a purchase, the down payment actually goes towards reducing your payment and not directly to the pocket of the leasing company or agent. Their are also fees that may be due when you reach the end of your lease term.

Some of the fees that are typically due at the end of the lease are for excess mileage (your lease typically allows for 12,000 – 15,000 miles per year) and maintenance costs. If the vehicles needs more than a wash and wax job to look like new, you will often be charged for the restoration and needed repairs. The lease should clearly state what the standards are for your lease return and the costs associated with any needed maintenance.